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The GOP’s Communist-style rigidity

COMMENTARY | September 22, 2010

Republican party pronouncements on the economy are stuck in a failed, wildly unrealistic ideology unlike anything in the history of the American capitalist system. For uncritical acceptance of beliefs, it is much like Stalinism, writes Henry Banta.

By Henry Banta

Over the last three decades the Republican party has become trapped in a rigid ideology.  At the center are economic principles which radically depart from the common-sense pragmatism that used to characterize our capitalist system. Worse, this ideology requires the uncritical acceptance of beliefs that are simply untrue, based on assumptions about how markets work that are hopelessly inconsistent with overwhelming evidence. 

In clinging to their ideology these Republicans are doing a very creditable imitation of the old hard-core Communists who could not or would not accept that their system was grounded on propositions that flew in the face of human experience. Republican leaders cannot accept the fact that markets occasionally produce perverse results and that some level of government intervention is necessary to avoid catastrophe.  

Even in the aftermath of the crisis of 2007-8 they still cannot acknowledge the need for government action. Their ideology requires them to not only deny any responsibility for what happened, but to deny any role for the government in cleaning up their mess. All they can offer is further deregulation and more tax cuts for the rich. In fact, no matter the issue, their policy is always the same: less taxes, less government. 

Ideas like these should be ridiculed by an opposition party – but hardly any Democrats say much except to warn against a return to Bush-era failures. Some seem not to trust the public to understand issues, and some may even share the GOP ideology, having heard it for so long. The press is also at fault: for many journalists, being objective means not saying one party has worse ideas than another, no matter how absurd its positions.

The “less-government” ideology is based on the “efficient market theory.” For the Republican ideologues, the “efficient market” will create an economy of awesome wealth and abundance. It requires only low taxes; an absolute minimum of government regulation – barely more that what is necessary to enforce private contracts, and avoiding even a hint of inflation. It aspires to a state of “perfect equilibrium” where markets work flawlessly. It has an eerie resemblance to the old Communists’ utopian vision of a “workers’ paradise.”

The assumptions behind the efficient market theory have always been wildly unrealistic. To start, it assumes every one is able to make perfectly rational economic decisions on the basis of perfect information – even about the future – and that markets always accurately and efficiently value all assets – hence there is no possibility of a “bubble.” 

Like most ideologues, the efficient market guys have a hostility to testing their theory against empirical reality.  Their favorite economist, Milton Friedman, actually disparaged any effort to support the theory with empirical evidence.  Since the theory predicted that the market would punish businesses and consumers that did not act as “rational economic men,” there was no need to examine actual market behavior.  One should just trust that things would come out as the theory predicted. 

The efficient market ideologues seem incapable of absorbing any useful lesson not just from the crisis of 2007-8, but from the savings and loan debacle, the Enron scandal, the collapse of Long Term Capital Management, or the dot-com bubble. Standing firmly in this tradition, House Minority Leader Boehner calls for a continuation of the Bush economic policies without even mentioning where they got us. One would think that a financial system taken to the edge of collapse and ten million unemployed would deserve comment. Clearly evidence doesn’t matter; blind faith in the efficient market theory does.

Most troublesome for the rest of us is that the Republicans have become incapable of compromise. Compromise, for the ideologue, involves a breach of faith, a betrayal of basic principles and values. The ordinary give and take that has always characterized government in a pluralistic and democratic society becomes, in the eyes of the ideologue, reprehensible. 

Flirting with opposition must be punished. Like old Stalinists in pursuit of Trotskyites, the Republicans have been relentless in trying to purge their ranks of heretics. Party members who depart from the pure ideology are subject to expulsion or, like poor John McCain, forced into humiliating recantations.

Nevertheless  there have been defections. Most prominent perhaps was that of Judge Richard Posner of the U.S. 7th Circuit Court of Appeals. Judge Posner (a Reagan appointee) was a leader of the Chicago school of economists and known for his work in applying the efficient market theories to legal problems. He announced his defection in an article in the New Republic entitled “How I Became a Keynesian” (September 23, 2009).

Perhaps nothing more clearly demonstrates the hostility of Republican politicians to economic evidence than their indifference to the effect of their policies on the middle class. This parallels the hypocrisy of the Communist elite who pretended to advance the cause of the working class while indulging in an extravagant life style. Republicans endlessly talk about the middle class but consistently implement policies that only benefit the very rich. As the Wall Street Journal recently noted, the years of Republican rule have not been very good for the middle class: “...[T]he wealthiest 20 percent of the American population claimed 43.3 percent of household income in 1970, but controlled 50 percent by 2008."  (August 5, 2010.) And this way understates how dramatically their policies have benefitted the very rich.  A recent study shows that between 1993 and 2008 the top 1 percent captured 52 percent of the real annual income growth. 

It is almost impossible to find a Republican politician who is willing to even discuss, much less explain, why we have had such a massive shift in wealth and income to the very rich. Or why the trend accelerated during the Bush years. Or, even more importantly, why the period between WWII and the 1970s – a period denounced by Ronald Reagan as an era of big government, high taxes, and stifling regulation – saw the greatest growth in middle class wealth and income in American history.

Again, like the old Communists, the Republicans more and more depend on blatant propaganda for political support. Of course Republicans would deny dealing in propaganda, but they very clearly have friends – lots of close friends – who shamelessly use it.  (Remember “death panels,” the birth certificate, the Obama TARP bailout, “secular European socialism,” Kenyan anticolonialism, or anything that Beck, Limbaugh or Hannity may say next.)

Practical politicians run a big risk when they embrace the rhetoric of a simplistic and rigid ideology. There are always those who can find fault in the purity of their position. No matter how extreme their stance, there is someone willing to go a step further. The radical efficient market ideology is singularly vulnerable. There is no logical limit to the call for less government and lower taxes. As the Tea Party has demonstrated, the genie is out of the bottle.

None of this suggests that the Republicans cannot win elections, if for no other reason than that the Democrats are utterly incapable of articulating an alternate economic theory. In times of great uncertainty people fall back on their basic beliefs. For more than 30 years, the public has heard little but the simplistic slogans of right-wing economics. Now they are groping for certainties of the past. There is a great appeal in placing the blame on a betrayal of the old faith: government is bad, taxes are bad, regulation is bad. But in the end, if the Republicans succeed in perpetuating their failed ideology, their children and grandchildren are unlikely to forgive them.

Posted by Mike H
09/22/2010, 04:50 PM

In the eyes of modern liberal its now a bad thing to be a communist. Wow, wonders never cease!

Posted by pinetree
09/22/2010, 05:17 PM

I think Mr. Banta is not referring not.to generic communism, but Stalinisml/Leninism. Liberals gave up on stalinism over 50 years ago, the GOP adopted it 30 years ago.

And anyway, do you have an argument to offer, or just cheap rhetoric?

I find this to be a fine analysis.

These Republicans are not clinging, their donors are!
Posted by Brett B
09/22/2010, 11:41 PM

Don't forget. Republicans or Democrats don't do anything accept what their donors tell them to. The simple truth is Neo-Liberalism is the only ideology that worships money as the most important input in an economy and worships tax cuts as the only way to grow the economy. That is the myth these donors need to perpetuate in order to keep their 400% wealth increases since Reagan. They know that the gig is up for Neo-Liberalism as a ruse and an apologia for their style of plutocratic anti-competitive political capitalism. Don't get lost with the Reps, or the Dems. They only say what they are told. The real story is behind the curtains that protects "property rights" of the Top 1%, but violates all the rights, including property rights, of 99% of Americans. That's what needs exposing and that is campaign finance and money as speech precedent that gutted this democracy.

Out of desperation
Posted by Oliver Pospisil
09/23/2010, 04:47 AM

Well done!

What else can you do, when you know that this is not the time for conservatives but change, dramatical change?
Change in many ways: global, demographically and ideological.
You try to ignore it, if you don't have the right people on board who lead the change.

Again, a great analysis!

Government Agency Expansion
Posted by David Loree
09/23/2010, 03:39 PM

With 53% of the people paying no income tax how will this expansion of government regulatory agencies be funded? During the years addressed in this essay government employment and compensation has far surpassed that of the private sector. Is the answer then that we need more government jobs?

Posted by Wilfrid Hartnagel
09/23/2010, 11:22 PM

In a "democracy" sheep (99% population) are entitled to elect the shepherd (1% oligarchs) that takes them to the slaughter house.

Why should a shepherd design a system that favors sheep?

Sheep are supposed to provide wool and meat but not supposed to moan about the shepherd's wealth.

Posted by David Loree
09/24/2010, 08:07 AM


Gentleman and Scholar
Posted by David Reno
09/29/2010, 11:16 AM

To understand this in a proper context, I highly recommend a book that has been unjustifiably ignored.

The late Dr. Albert Ellis, known for popular books on sexuality, had a debate with Nathaniel Branden over Ayn Rand's philosophy.

Dr. Ellis wrote an excellent book, titled, "Is Objectivism A Religion?" (Lyle Stuart, 1970). Dr. Ellis was critical of dogmatic religions. He wrote a paper,"The case against religion", dogmatic ones, and used the framework to examine Ayn Rand and her acolytes.

Read his book and see if you agree.

David Reno

Inevitable monopoly
Posted by Paul Palmer
12/13/2010, 06:52 AM

Criticizing "efficient markets" by pointing out defects in their detailed operations, while perfectly correct is also quite weak.

The worst defect of free markets is their inability to impose equilibrium, so that those who achieve some power are free to abuse that power to gain even more power and eventually to monopolize and control the market, making its theoretical flaws insignificant by comparison.

Then the powerful in the market make alliances with the external brokers of power, most notably with the government wielding state power, the police, the executive, the military, the laws and the propaganda media. This imposes a fascistic monopoly of power that needs to feed on itself, destroy the fermenting broth of the entire market, bring down the country, expend itself in endless war and start the cycle again.

Apparently this is the road the US is on today. We have a bloated military serving perpetual war, terrorism and invasion, the media are in the hands of the rich, the rich control the legislature, wealth is being sucked away from the middle class and we seem headed for a collapse into private excess and public poverty.

If not this cycle, it will come on the next turn of the wheel, since power always seeks its own concentration.

This is much worse than a mere non-functioning of a theoretically mis-analyzed market mechanism.

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